New patent laws change the course of innovation

Patents and intellectual property are hot topics in the news these days, and it seems like you can’t open the newspaper without reading about another lawsuit filed over patent or IP infringement. But, as these cases tear through the courtrooms, the question remains: “Do patents spur innovation?”

As Alec Schibanoff, vice president of marketing at the General Patent Corporation, puts it, patents are a foundational aspect of the American spirit of innovation:

A patent is published. It is a public document that anyone can access. Every time an invention is patented, the US federal government grants the inventor a limited monopoly (that's the patent) in exchange for publishing the patent and making the invention known to all. That enables the next generation of inventors to build on that invention. That is how Edison's light bulb became the basis for the vacuum tube that made possible the first generation of radios, then televisions, and then the earliest computers. And from those vacuum tubes came the transistor, and from the transistor the microprocessors of today. It is in large part the U.S. patent system that made America the global leader in innovation.

But recent changes to patent laws have changed the way that entrepreneurs handle their workflow. In the past, patents were awarded to the “first to invent” a technology, which meant that inventors traditionally published articles about the problem to be solved or the technology in development in order to help establish that “first-to-invent” status. Also, inventors would often wait to see if a technology was successful before patenting it.

This is no longer the case, however. In March, 2013, the patent office changed its policies so that it now awards patents on a first-to-file basis, which is common practice in many other nations.

This development significantly changes the way that companies approach patents. Now, it is common for inventors to start work on patents before the even start working on the technology itself. This tends to favor smaller start-ups, which are frequently faster and more agile than big businesses.

Other changes to the law, however, have not been beneficial for small companies. The March, 2013 changes also made it more difficult for companies to resolve patents disputes without going to court. Patent litigation can be extremely costly and time consuming, which could prove burdensome for smaller companies.

Another change to patent law, a “fast-track” provision passed in 2011, has increased the number of patent filings in the past two years, and companies are starting to include intellectual property costs in their budgets.

Taken together, these changes do give small companies the chance to compete with the giants of industry – unless they get bogged down in the courtroom. Still, with the influx of patents and an emphasis on intellectual property, perhaps the United States will return to prominence as one of the most innovative nations on the planet.